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PLAY STAR, S.A. DE C.v. v. HASCHEL EXPORT CORP.
April 24, 2003
PLAY STAR, S.A. DE C.V., PETITIONER,
HASCHEL EXPORT CORP., RESPONDENT.
The opinion of the court was delivered by: Louis L. Stanton, United States District Judge
Play Star, S.A. de C.V. ("Play Star"), a Mexican corporation, moves pursuant to Section 207 of the Federal Arbitration Act to confirm an arbitration award, for attorney's fees and costs, and post-judgment interest. Haschel Export Corporation ("Haschel"), a New York corporation, cross-moves to vacate the award on the grounds of misconduct and excess use of power by the arbitrator.
Background and Procedural History
The parties entered into an agreement on March 17, 1997 whereby Haschel sold toys to Play Star for distribution in Mexico. On April 9, 2001, Play Star initiated an arbitration*fn1 under the arbitration clause in the distributorship agreement, which provided that "any controversy arising out of or relating to this agreement. . . . shall be resolved by arbitration in the City of New York in accordance with the rules than [sic] obtaining of the American Arbitration Association" ("AAA"). Because it was an international dispute, the AAA's International Arbitration Rules governed.
On June 20, 2001 Robert Y. Stebbings, Esq. was appointed as the sole arbitrator by the AAA. Both parties submitted memoranda (called "memorials"), witness statements and exhibits. In November 2001, there was a two-day hearing before the arbitrator.
On February 11, 2002 the arbitrator issued the following award, without setting forth his reasons:
1. Within thirty (30) days from the date of
transmittal of this Award to the Parties, hereinafter
referred to as "Play Star" and "Haschel," Haschel
shall pay to Play Star the sum of $31,762.00. After
the date such payment is due, Haschel shall pay
interest on any unpaid balance at a compounded annual
rate of 6%.
4. This Award is in full settlement of all claims
and counterclaims submitted to this arbitration.
The Award was sent to the parties on April 1, 2002. That same day, Play Star wrote the AAA pointing out that Article 27.2 of the International Arbitration Rules*fn2
requires the tribunal to "state the reasons upon which the award is based" and requesting a reasoned award. In response, the arbitrator sent the parties a letter on April 11, 2002 stating:
I was under the mistaken impression that the
above-referenced case was being conducted pursuant to
the commercial rules and therefore prepared the award
pursuant to those rules. If the parties wish a
reasoned award pursuant to the international rules,
they should agree to reinstate me as arbitrator and
authorize me to prepare the award pursuant to the
international rules. The parties should be advised
that this may change the outcome.
On April 12, 2002 Haschel sent a letter to Play Star's lawyers, stating:
Please be advised that our client, Haschel Export
Corporation accepts the award rendered by Mr.
Stebbings on February 11, 2002, which was transmitted
on April 1, 2002.
However, should you wish to follow the procedures
outlined in Mr. Stebbings letter of April 11, 2002, in
response to your letter of April 1, 2002, we consent
to the reinstating of Mr. Stebbings as Arbitrator and
grant the authorization required to prepare the award
pursuant to the international rules.
On April 17, 2002 Play Star wrote to the AAA to confirm that "Play Star agrees to reinstate Mr. Stebbings as Arbitrator pursuant to Mr. Stebbings' letter of April 11, 2002."
After his reinstatement, the arbitrator received no additional evidence from either side. On June 28, 2002 he issued a second Award, setting forth the history of the transactions between the parties, making specific findings of fact, and giving the rationale for his Award, which concluded:
Haschel shall pay to Play Star damages of
$303,087.58 plus interest calculated to the date of
payment at the respective statutory annual rates
provided by the law of the State of New York
applicable to contracts entered into and to be
performed in the State of New York, calculated as
This Award is in full settlement of all claims and
counterclaims submitted to this Arbitration.
The arbitrator gave no explanation for the vast difference between the amounts of the two awards. On July 15 Haschel wrote the AAA pursuant to Article 30.1 of its International Arbitration Rules,*fn3
which allow a request for interpretation, correction of clerical errors, or an additional award on omitted claims. Play Star opposed, arguing that "Any obscurity or ambiguity in the grounds for the decision does not warrant a request for interpretation of the award." (Santens' 7/19/02 ltr., p.3, emphasis in original).
By letter dated August 19, 2002 Mr. Stebbings stated "I hereby decline to issue a follow-up to ...
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